Seven MegaTrends of Professional Services – #4 Transparency
Download the complete White Paper: The Seven MegaTrends of Professional Services
Continued from Connectivity. Full table of contents below.
MegaTrend Four: Transparency
On October 25, 2004, the board of directors of financial services conglomerate Marsh & McLennan announced “significant reforms to the business model… which will be rooted in transparency.” The controversy on the payments its Marsh insurance brokerage arm was making to insurers, unbeknownst to its clients, resulted in a settlement of $850 million to policyholders. While this tale relates to another MegaTrend—that of Governance—the result is greater transparency. Transparency to clients, to the market, to regulators, and often even to competitors.
Transparency is in fact one of the most powerful trends across all of business and society, hardly just professional services. One of the early catch-cries of the digital revolution was “information wants to be free.” In a world of email and the Internet, it’s certainly very easy for it to escape. The Internal Memos website claims to be the Internet’s largest collection of corporate documents and internal communication, providing a home for any company documents that may have been liberated by disgruntled employees. Clients and competitors can login and have a peek if they wish. At a broader social level, the presence of cameras—often video cameras—in many mobile phones today means that incidents, accidents, and misbehavior can be seen by all, whether or not a television crew is there to capture the moment.
The most pointed dimension of transparency for professional services firms is the newfound visibility clients have of their suppliers. The shift to digital communication means that clients are increasingly inclined to ask to see what is happening while their professionals are at work. Ketchum PR, part of the Omnicom communications group, has for some years been using an online space so its major clients can see all work underway as it develops media campaigns, and provide input. Ketchum PR’s CIO at the time described it as letting the client see how they “make sausage”, and the reality that it can be a messy process. London law firm Kemp Little has set up an extranet so its clients can see at any point in time exactly what has been happening on their matters and what fees have been incurred. On a broader level, advertising agencies have been reluctantly placed in the vanguard of fee transparency. It is now common practice for major advertisers to demand complete visibility of costs incurred by their agency, including labor, and choosing the profit margin they allow the agency to earn. The challenge for professional firms is to acknowledge the MegaTrend of Transparency, and to respond in ways that will build value and relationships.
Table of contents
– MegaTrend 1: Client Sophistication
– MegaTrend 7: Commoditization
Responding to the MegaTrends
– Lead Your Clients into Knowledge-Based Relationships
– Build Strategic Transparency
– Create a Highly Networked Firm
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